O'Connor's Law of the Tendency of the Rate of Profits to Fall

O’Connor’s Law of the Tendency of the Rate of Profits to Fall states that, over time, profits tend to decrease in capitalist economies. This occurs because businesses invest in more advanced, productive technology to stay competitive, which increases the amount of capital needed. As investment grows, but real output and profits don’t keep pace proportionally, the overall profit rate can decline. Essentially, technological progress makes production more efficient but often reduces profitability over time, posing a challenge for ongoing investment and growth in a capitalist system.